Question

What is the opportunity cost in this scenario? Harry has been very busy at work for the past two weeks. He has been working weekends too. Finally, he is going to get a weekend off. Originally, he planned to paint his apartment that weekend. He also considered going fishing for the weekend. But then his parents called and asked him to come for dinner because it has been a while since they have seen each other. Later on, his friend Theo informed him about a surprise birthday party for another friend. Theo plans to reserve a room at a restaurant for the celebration, with the cost to reserve the room split between Theo, Harry, and three other friends. Now Harry is confused about what he should do over the weekend. He decides that, for him, the most important commitments are going over to his parent's house and attending his friend's birthday party. In the end, Harry decides to see his parents.

Answer 1

maybe 20 dollars for gas money to get to his parents

Answer 2

Harry's opportunity cost for going to his parents is not going to his friend's birthday party.

Step-by-step explanation:

Harry has got a weekend off. He can use that weekend to paint his apartment or go fishing. He can also visit his parents for dinner. Or he can go to his friend's birthday party.

With so many options Harry is confused, about what he should do. The most important commitments for him are going over to his parent's house and attending his friend's birthday party.

If he chooses to visit his parents, the opportunity cost is not going to the party.

The opportunity cost of a decision is the cost of sacrificing the second-best alternative. The second-best alternative in this decision is attending the birthday party. So it will be considered the opportunity cost.